Exam 22: Budgeting

Next year's sales forecast shows that 20,000 units of Product A and 22,000 units of Product B are going to be sold for prices of $10 and $12 per unit, respectively. The desired ending inventory of Product A is 20% higher than its beginning inventory of 2,000 units. The beginning inventory of Product B is 2,500 units. The desired ending inventory of Product B is 3,000 units. -The budgeted finished goods inventory and cost of goods sold for a manufacturing company for the year are as follows: January 1 finished goods, $765,000; December 31 finished goods, $540,000; and cost of goods sold for the year, $2,560,000. The budgeted cost of goods manufactured for the year is

Mandy Corporation sells a single product. Budgeted sales for the year are anticipated to be 640,000 units, estimated beginning inventory is 98,000 units, and desired ending inventory is 80,000 units. The quantities of direct materials expected to be used for each unit of finished product are given below.​ Material A: 0.5 lb. per unit @ $0.60 per pound Material B: 1.0 lb. per unit @ $1.70 per pound Material C: 1.2 lbs. per unit @ $1.00 per pound -Production and sales estimates for June for Robin Co. are as follows: The budgeted total sales for June is

After the sales budget is prepared, the capital expenditures budget is normally prepared next.

Budgets are normally used only by profit-making businesses.

Match each phrase that follows with the term (a-e) it describes. -Actions to achieve budgeted goals A)Planning B)Directing C)Controlling D)Budget slack E)Goal conflict

Finch Company began its operations on March 31 of the current year. Finch has the following projected costs: *Of the manufacturing costs, three-fourths is paid for in the month they are incurred; one-fourth is paid in the following month.**Insurance expense is $1,000 a month; however, the insurance is paid four times yearly in the first month of the quarter (i.e., January, April, July, and October).***Property tax is paid once a year in November.​ -The cash payments for Finch Company expected in the month of June are

A company is preparing its cash budget. Its cash balance on January 1 is $290,000, and it has a minimum cash requirement of $340,000. The following data have been provided: ​ -The amount of cash excess or deficiency (after considering the minimum cash balance required) for February is a(n)

The budgeted balance sheet is also called a pro forma balance sheet.

The treasurer of Calico Dreams Company has accumulated the following budget information for the first two months of the coming fiscal year: The company expects to sell about 35% of its merchandise for cash. Of sales on account, 80% are collected in full in the month of the sale, and the remainder in the month following the sale. One-fourth of the manufacturing costs are paid in the month in which they are incurred, and the other three-fourths in the following month. Depreciation, insurance, and property taxes represent $6,400 of the monthly selling and administrative expenses. Insurance is paid in February, and property taxes are paid yearly in September. A $40,000 installment on income taxes is to be paid in April. Of the remainder of the selling and administrative expenses, one-half are to be paid in the month in which they are incurred and the balance in the following month. Capital additions of $250,000 are paid in March.Current assets as of March 1 are composed of cash of $45,000 and accounts receivable of $51,000. Current liabilities as of March 1 are accounts payable of $121,500 ($102,000 for materials purchases and $19,500 for operating expenses). Management desires to maintain a minimum cash balance of $25,000.Prepare a monthly cash budget for March and April.

Finch Company began its operations on March 31 of the current year. Finch has the following projected costs: *Of the manufacturing costs, three-fourths is paid for in the month they are incurred; one-fourth is paid in the following month.**Insurance expense is $1,000 a month; however, the insurance is paid four times yearly in the first month of the quarter (i.e., January, April, July, and October).***Property tax is paid once a year in November.​ -The cash payments expected for Finch Company in the month of May are

The budgeted balance sheet assumes that all operating and financial plans are met.

Mandy Corporation sells a single product. Budgeted sales for the year are anticipated to be 640,000 units, estimated beginning inventory is 98,000 units, and desired ending inventory is 80,000 units. The quantities of direct materials expected to be used for each unit of finished product are given below.​ Material A: 0.5 lb. per unit @ $0.60 per pound Material B: 1.0 lb. per unit @ $1.70 per pound Material C: 1.2 lbs. per unit @ $1.00 per pound -The dollar amount of Material B used in production during the year is

A disadvantage of static budgets is that they

At the beginning of the period, the Cutting Department budgeted direct labor of $155,000, direct materials of $165,000, and fixed factory overhead of $15,000 for 9,000 hours of production. The department actually completed 10,000 hours of production. The appropriate total budget for the department, assuming it uses flexible budgeting, is

A budgeted income statement integrates the sales budget, cost of goods sold budget, and selling and administrative expenses budget, but excludes estimates of other revenue, other expense, and income tax.

A company is preparing its cash budget. Its cash balance on January 1 is $290,000, and it has a minimum cash requirement of $340,000. The following data have been provided: ​ -When preparing the cash budget, all the following should be considered except

Below is budgeted production and sales information for Flushing Company for the month of December. The unit selling price for product XXX is $5 and for product ZZZ is $15.​ -Budgeted production for product ZZZ during the month is

Rodger's Cabinet Manufacturers uses flexible budgets that are based on the following manufacturing data for the month of July: Prepare a flexible budget for Rodger's based on production of 10,000, 15,000, and 20,000 units.

Match each phrase that follows with the term (a-f) it describes. -Plays an important role for organizations in planning, directing, and controlling a company's future goals A)Budget B)Capital expenditures budget C)Sales budget D)Production budget E)Cash budget F)Budgeted balance sheet

A company is preparing its cash budget. Its cash balance on January 1 is $290,000, and it has a minimum cash requirement of $340,000. The following data have been provided: ​ -Pelican Roost Hotel has 100 rooms. For a normal February, it averages 60% capacity. However, there are three 3-day events scheduled for February in which the hotel expects to be completely booked. Of the additional guests coming for the events, one-half will likely attach an extra day before or after the event to enjoy the beach and/or other local sights. You have determined that the housekeeping staff requires 30 minutes to clean each occupied room. The housekeeping staff is paid $14 per hour. The housekeeping labor cost is fully variable to the number of occupied rooms. Assuming it is not a leap year, the total housekeeping budget for February is